Latin America and the Caribbean exports should decrease by 24% in 2009 compared with the previous year, after having recorded a 17% average annual growth rate from 2003 to 2008.
The reason for the expected retraction is the international financial crisis, as informed by the Economic Commission for Latin America and the Caribbean (Eclac). The data were culled from the report International Trade in Latin America and the Caribbean 2009: Crisis and Recovery, disclosed on the organization’s website.
According to the Eclac, the decline will result from the combination of a 15% decrease in prices and a 9% reduction in volume shipped. According to the report, the simultaneous reduction in product price and volume shipped had not taken place since 1937.
It is an all-time record, second only to the severe slowdown in trade in the period that followed the crisis of 1929, which resulted from protectionist policies adopted by the United States and Europe.
The report states that even though an overall decline in exports is expected, there should be significant differences between sub-regions and countries.
Whereas the forecast for Venezuela is of a 42% reduction, and for the Andean countries, 32%, in the Caribbean, the rate of decline should be 29%, and in Mexico and Chile, it may be 22%, compared with 2008.
The estimate for Brazil is of a 22% decline as well, a rate very close to the actual result (roughly 23%) calculated by the Brazilian Ministry of Development, Industry and Foreign Trade. Imports in Brazil decreased by 26.2%.
In the analysis by sector, data for January to September 2009 show that minerals and oil exports were the ones most affected last year, with an average reduction of 42.3%, whereas the manufacturing industry products had a 25.4% retraction, and agricultural products saw a 18.4% decline.
To the Eclac, imports in 2009 should decrease by a similar rate as that of the Brazilian foreign debt crisis of 1982. In Latin America and the Caribbean, the forecasted reduction is roughly 25%. Contrary to what takes place with exports, the reduction of imports is mostly due to the volume shipped, which decreased by 16%, whereas prices fell by 9%.
The Eclac has also noted differences between countries and sub-regions. There was a 35% reduction in the Caribbean, 32% in Chile, 22% in Mexico and 26% in South America, for instance. According to the report, due to the retraction in economic activity, several countries in the region have adopted measures for containing imports to prevent eventual imbalances in the balance of payments.
Despite the foreign trade slowdown, the Eclac believes that there should be improvements in 2010. One of the contributing factors should be a partial recovery of prices for several basic products, such as copper, oil, wheat and soy.
The gradual recovery of international financing and the partial improvement in the level of economy activity in several industrialized economies and in the Latin America and Caribbean region are also going to contribute to the improvement.
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